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11/07/96 STATE FARM MUTUAL AUTOMOBILE INSURANCE

November 7, 1996

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, AS SUBROGEE OF RODNEY LUCKHART, PLAINTIFF-APPELLEE,
v.
UNIVERSAL UNDERWRITERS GROUP, DEFENDANT-APPELLANT (JOYCE PONTIAC GMC, JEEP-EAGLE AND TOYOTA, INC., ASSUMED NAME OF NORTHERN ILLINOIS AUTO CENTER, DEFENDANT).



Appeal from the Circuit Court of Du Page County. No. 95--AR--0161. Honorable Joseph S. Bongiorno, Judge, Presiding.

Rehearing Denied January 14, 1997. Released for Publication January 14, 1997

The Honorable Justice Hutchinson delivered the opinion of the court. Geiger and Rathje, JJ., concur.

The opinion of the court was delivered by: Hutchinson

JUSTICE HUTCHINSON delivered the opinion of the court:

Plaintiff, State Farm Mutual Automobile Insurance Company (State Farm), as subrogee of Rodney Luckhart, commenced this action by filing a complaint for breach of contract against defendants, Joyce Pontiac GMC, Jeep-Eagle, and Toyota, Inc. (Joyce Pontiac GMC) and Universal Underwriters Group (Universal). Plaintiff seeks recovery of $9,092.15 it paid out for claims made against its insured, Rodney Luckhart.

At issue in this insurance coverage dispute is whether Steinberg v. Universal Underwriters Insurance Co., 272 Ill. App. 3d 79, 208 Ill. Dec. 743, 650 N.E.2d 14 (4th Dist. 1995) (holding that a permissive user with personal insurance coverage in compliance with the minimum limits of the Illinois Vehicle Code (Code) (625 ILCS 5/1--100 et seq. (West 1994)) is not "an INSURED" under a car dealer's garage policy) or Madison Mutual Insurance Co. v. Universal Underwriters Group, 251 Ill. App. 3d 13, 190 Ill. Dec. 401, 621 N.E.2d 270 (5th Dist. 1993) (holding that a permissive user with or without personal insurance coverage in compliance with the minimum limits of the Code is "an INSURED" under a car dealer's garage policy) is the better approach in dealing with the issue of whether a test driver/permitted user is "an INSURED" under a car dealer's garage policy.

Plaintiff's complaint alleges the following in a single count. On March 29, 1994, Rodney Luckhart was the test driver of a 1994 Jeep Cherokee owned by defendant, Joyce Pontiac GMC. While proceeding eastbound on 75th Street in Naperville, Luckhart rear ended an automobile owned by Vivian Carter and operated by Raun Calinee. Both parties suffered injuries, and the automobile was damaged. At the time of the accident, Mr. Luckhart was insured by State Farm under a personal auto policy. Joyce Pontiac GMC was insured by Universal. Vivian Carter and Raun Calinee made demands upon State Farm for their claims. State Farm settled the Carter and Calinee claims for $9,092.15.

State Farm, as subrogee of Rodney Luckhart, then brought this breach of contract action alleging Universal had failed and refused to pay, according to its contracted-for policy obligations, the claims arising out of the March 29, 1994, automobile accident. State Farm's complaint alleged Luckhart, its subrogee, was entitled to coverage under the Universal policy. As the operator of a vehicle in Illinois with the permission of its owner, Luckhart was a person "required by law to be an INSURED" while driving that vehicle. Therefore, Luckhart fit the definition of "an INSURED" within the meaning of that insuring agreement. Relying upon the decision in Madison Mutual, the complaint further asserted that the Universal policy afforded primary coverage for the accident.

Relying on Steinberg, Universal contended (1) that Rodney Luckhart was not a person "required by law to be an INSURED" under its policy; and (2) that, if Luckhart were "an INSURED," Universal's coverage would be only the amount necessary to provide Luckhart with $20,000 per person/$40,000 per accident limits which Luckhart already possessed from State Farm, and, therefore, Universal owed no coverage to Luckhart.

The trial court granted plaintiff's motion for summary judgment and denied Universal's motion for summary judgment, finding Madison Mutual to be older and more persuasive than Steinberg. The trial court also determined that the Universal policy is primary, whereas the State Farm policy is excess. Judgment was entered in plaintiff's favor in the amount of $9,092.15. Defendant's motion for reconsideration was denied. This timely appeal follows.

On appeal, defendant argues that the trial court erred in finding for plaintiff and holding that Rodney Luckhart is "an INSURED" under Universal's garage policy definition No. 3 of "WHO IS AN INSURED" and pursuant to the relevant provisions of the Code. We disagree and we affirm.

The relevant portion of Universal's garage policy states:

"INSURING AGREEMENT - WE will pay all sums the INSURED legally must pay as damages (including punitive damages where insurable by law) because of INJURY to which this insurance applies caused by an OCCURRENCE arising out of GARAGE OPERATIONS or AUTO HAZARD.

'AUTO HAZARD' means the ownership, maintenance, or use of any AUTO YOU own or which is in YOUR ...


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